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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
IN RE SAMSUNG GALAXY SMARTPHONE MARKETING AND SALES PRACTICES LITIGATION
Case No. 16-cv-06391-BLF ORDER GRANTING IN PART AND DENYING IN PART MOTION TO COMPEL ARBITRATION AND DISMISS PLAINTIFFS’ CLASS ACTION CLAIMS AND STAYING PROCEEDINGS PENDING COMPLETION OF ARBITRATION
[Re: ECF 67]
In this putative class action, consumers contend that certain models of the Samsung Galaxy
smartphone have the propensity to overheat, often to volatile levels. Specifically, Plaintiffs
Demetrius Martin, Omar Atebar, Esther Vega, Jesus Vega, Lizett Anguiano, Tomas Hernandez,
Greg Robison, Dale Holzworth, Eric Pirverdian, Tomig Salmasian, Michael Kouyoumdjian, Dior
Dee, Cory Raymond, and Jesus Sanchez (collectively, “Plaintiffs”) allege that their smartphones
are prone to explode or burst into flames. They assert claims for violations of state consumer-
protection laws and unjust enrichment against Samsung Electronics America, Inc. and Samsung
Electronics Co., Ltd. (collectively, “Samsung”).
Presently before the Court is Samsung’s Motion to Compel Arbitration, Dismiss Plaintiffs’
Class Claims, and Stay All Proceedings. Mot., ECF 67. The Court held a hearing on Samsung’s
motion on March 1, 2018. The Court has considered the arguments presented at oral argument
and in the briefing, as well as the submitted evidence and applicable law. For the reasons that
follow, the Court concludes that certain Plaintiffs formed a valid arbitration agreement with
Samsung, and therefore GRANTS Samsung’s motion as to those Plaintiffs, DENIES Samsung’s
motion as to the remaining Plaintiffs, and STAYS the case pending the outcome of arbitration.
Case 5:16-cv-06391-BLF Document 87 Filed 03/30/18 Page 1 of 25
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I. BACKGROUND
The following facts are drawn from the First Amended Consolidated Class Action
Complaint (“FAC”), ECF 65. In October 2016, Samsung recalled the Samsung Galaxy Note7
(“Note7”) after reports that numerous devices had exploded and burst into flames. FAC ¶¶ 38, 42.
Plaintiffs own at least one of six other models of Samsung phones—the Galaxy S7 (“S7”), the
Galaxy S7 Edge (“S7 Edge”), the Galaxy S6 (“S6”), the Galaxy S6 Edge (“S6 Edge”), the Galaxy
S6 Edge+ (“S6 Edge+”), and the Galaxy Note5 (“Note5”). Id. ¶ 37. Plaintiffs plead that these
models, like the Note7, “pose a risk of overheating, fire and explosion as they were designed,
engineered, developed, manufactured, produced and/or assembled in a substantially similar
manner to the Note7.” Id.
Plaintiffs commenced this putative class action on November 2, 2016 and filed the
operative FAC on August 3, 2017. ECF 1, 65. Plaintiffs hail from California, Massachusetts, or
Maryland and seek to represent three statewide classes, which encompass all consumers who
reside in and purchased one of the relevant Samsung phones in California, Massachusetts, and
Maryland, respectively. FAC ¶¶ 95, 107, 119.1 Plaintiffs bring six causes of action: (1) violation
of California’s Unfair Competition Law on behalf of the California class, (2) violation of
California’s False Advertising Law on behalf of the California class, (3) violation of California’s
Consumers Legal Remedies Act on behalf of the California class, (4) violation of Maryland’s
Consumer Protection Act on behalf of the Maryland class, (5) violation of Massachusetts
Regulation of Business Practices for Consumers Protection on behalf of the Massachusetts class,
and (6) unjust enrichment on behalf of all classes. Id. ¶¶ 143–85, 198–201.
In September 2017, Samsung moved to compel arbitration on the ground that Plaintiffs
assented to, and did not opt out of, an arbitration clause that appeared either in a guidebook
included in the box with their phones or on Samsung’s website. Mot. 8–23. As discussed in more
detail below, the analysis of assent hinges on what information was presented and how that
information was presented to each individual Plaintiff—including the box, guidebook, and
1 Although the FAC proposes a Colorado class, FAC ¶ 131, Colorado Plaintiff Soto voluntarily
dismissed his claims without prejudice after Samsung filed its motion to compel, ECF 73.
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website. Samsung also requests that the Court dismiss the class-action claims of all Plaintiffs
compelled to arbitrate and stay all proceedings in the litigation pending arbitration. Mot. 23–25.
Plaintiffs filed an opposition, Opp., ECF 74, and Samsung filed a reply, Reply, ECF 76.
II. LEGAL STANDARD
Enforceability of an arbitration clause, and the determination of the scope of that clause, is
governed by the Federal Arbitration Act (“FAA”). 9 U.S.C. §§ 1 et seq. Under the FAA,
arbitration agreements are a matter of contract, and “shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C.
§ 2. Such generally applicable contract defenses include “fraud, duress, or unconscionability,” but
not “defenses that apply only to arbitration or that derive their meaning from the fact that an
agreement to arbitrate is at issue.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011)
(citation omitted). A party seeking to invoke an arbitration agreement may petition the district
court “for an order directing that such arbitration proceed in the manner provided for in such
agreement.” 9 U.S.C. § 4; see also Trompeter v. Ally Fin., Inc., 914 F. Supp. 2d 1067, 1071 (N.D.
Cal. 2012).
A district court faced with a petition to enforce an arbitration clause engages in a limited
two-part inquiry: first, it determines whether the arbitration agreement is valid, and second, it
determines whether the agreement encompasses the claims at issue. Ashbey v. Archstone Prop.
Mgmt., Inc., 785 F.3d 1320, 1323 (9th Cir. 2015). A district court does not consider challenges to
the contract as a whole, but rather only specific challenges to the validity of the arbitration clause
itself. See Rent–A–Center, W., Inc. v. Jackson, 561 U.S. 63, 70 (2010) (noting the “two types of
validity challenges” but holding that only challenges to the validity of the agreement to arbitrate
are “relevant to a court’s determination whether the arbitration agreement at issue is enforceable”).
III. DISCUSSION
A. Motion to Compel Arbitration
The issue before the Court is a focused one. “[A]rbitration is a matter of contract and a
party cannot be required to submit to arbitration any dispute which he has not agreed so to
submit.” AT & T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 648 (1986) (quoting
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United Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960)). Plaintiffs’
sole contention is that they did not form an agreement to arbitrate with Samsung, an argument
which the Court resolves under “ordinary state-law principles that govern the formation of
contracts.” First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995). Because the parties
agree that the law of each Plaintiff’s home state controls, the Court proceeds to analyze Plaintiffs’
claims by state.
1. Massachusetts
Plaintiff Holzworth is a resident of Massachusetts who purchased an S7 Edge in
Massachusetts. FAC ¶ 17. The parties agree that Massachusetts law governs the question whether
he formed an agreement to arbitrate with Samsung.
The parties also agree on the universe of applicable cases. In 1-A Equipment Co. v. Icode,
Inc., the Massachusetts District Court Appellate Division held that a buyer was bound by a
contractual forum selection clause sent with the purchased software program even though the
buyer did not receive the agreement until after the purchase was made. No. 1460, 2003 WL
549913, at *2 (Mass. App. Div. 2003). The court emphasized that an inside-the-box setup can be
an efficient way to do business, especially when the alternative of orally reciting terms is costly
and ineffective. Id. Likewise, in Feeney v. Dell Inc., the Appeals Court of Massachusetts
enforced an arbitration agreement, which was enclosed with the shipped product and provided that
the customers would be bound by accepting delivery. 2015 WL 4460182, at *2, *4–5 (Mass. App.
Ct. 2015). The court concluded that “a purchaser of a computer, upon placing an order, would
expect additional terms, such as a warranty and a period of time to return the goods, given the
nature of the product involved.” Id. at *4.
Both Massachusetts cases rely on two Seventh Circuit cases that approve of inside-the-box
agreements; indeed, the court in 1-A Equipment explicitly “adopt[ed] the rationale of these cases.”
2003 WL 549913, at *2. The Seventh Circuit considered similar facts to those in the
Massachusetts cases and held that terms inside the box of a product bind consumers who keep the
product beyond a specified window if the consumer has an opportunity to review the terms and
reject them by returning the product. Hill v. Gateway 2000, Inc., 105 F.3d 1147, 1148 (7th Cir.
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1997); ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1451 (7th Cir. 1996) (“Notice on the outside,
terms on the inside, and a right to return the software for a refund if the terms are unacceptable (a
right that the license expressly extends), may be a means of doing business valuable to buyers and
sellers alike.”). The Seventh Circuit explained that practicality favors this conclusion because
“[c]ustomers as a group are better off when vendors skip costly and ineffectual steps such as
telephonic recitation, and use instead a simple approve-or-return device.” Hill, 105 F.3d at 1149.
Moreover, the Uniform Commercial Code allows acceptance by conduct, for example by using
software after having a chance to read the accompanying license. ProCD, 86 F.3d at 1452.
Under these cases, Plaintiff Holzworth is clearly bound by Samsung’s arbitration
agreement. The outside of the box states that purchase is “subject to additional Samsung terms
and conditions.” Blackard Decl., ECF 68, Ex. D. Inside the box, there is a guidebook titled
“Important Information” and subtitled “Health and Safety Information” and “Warranty Legal
Information” with those topics’ respective page numbers. Id., Ex. I, at 2. On the page
immediately following the cover, the user is instructed in bold that the guidebook contains
“important terms and conditions” that the user accepts by using the phone. Id. at 3. Further down
the page, under the bold and larger-text heading “Legal Information,” the guidebook provides:
This product is covered under the applicable Samsung Limited Warranty
INCLUDING ITS DISPUTE RESOLUTION PROCEDURE and your right
to opt out of arbitration within 30 calendar days of the first consumer
purchase. You may opt out by either sending an email to
[email protected] with the subject line “Arbitration Opt-Out” or by
calling 1-800-SAMSUNG (726-7864).
Id. Finally, the Table of Contents lists the page for “Procedures for Dispute Resolution/30-day
Arbitration and Opt-Out Policy,” id. at 9, and the guidebook sets forth the arbitration agreement in
capital letters on the indicated page, id. at 30. These circumstances neatly fit within the Seventh
Circuit’s approval of “[n]otice on the outside [and] terms on the inside.” ProCD, 86 F.3d at 1451.
Plaintiffs’ sole challenge is to the remaining element—namely, “a right to return the
[product] for a refund if the terms are unacceptable.” Id. Specifically, Plaintiffs contend that
Samsung fails to specify “how a consumer may reject the terms and conditions.” Opp. 18. As a
preliminary matter, Plaintiff Holzworth does not allege or argue that he was unable to return his
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phone for a refund if he disagreed with the terms. It is not clear that anything more is required—
the cases reference “an opportunity . . . to reject [the terms] by returning the product.” Hill, 105
F.3d at 1148 (citing ProCD, 86 F.3d at 1451). In any event, the first page of the guidebook and
the arbitration section both inform users exactly how to opt out of the arbitration provision: users
can send an email or call the toll-free number. As the guidebook explains, a user does not forfeit
anything by opting out. See Blackard Decl., Ex. I, at 33 (“Opting out of this dispute resolution
procedure will not affect the coverage of the Limited Warranty in any way, and you will
continue to enjoy the benefits of the Limited Warranty.”). In this way, the opt-out provision is
even more favorable than a return policy because the user may keep the phone and avoid
arbitration.
In light of these circumstances, Plaintiff Holzworth agreed to arbitrate under Massachusetts
law. Accordingly, the Court GRANTS Samsung’s motion to compel arbitration as to Plaintiff
Holzworth.
2. California
Plaintiffs Martin, Atebar, Esther Vega, Jesus Vega, Anguiano, Hernandez, Pirverdian,
Salmasian, Kouyoumdjian, Dee, Raymond, and Sanchez are residents of California who acquired
their Samsung phones in California. FAC ¶¶ 10–15, 18–23. The parties agree that California law
governs the question whether they formed an agreement to arbitrate with Samsung.
The parties dispute the importance of the Ninth Circuit’s recent decision in Norcia v.
Samsung Telecommunications America, LLC, 845 F.3d 1279 (9th Cir.), cert. denied, 138 S. Ct.
203 (2017). The Court begins with an overview of Norcia, then examines the circumstances of
the California Plaintiffs in the instant case.
a. Description of Norcia
In Norcia, the Ninth Circuit confronted the question whether the brochure in Samsung’s
Galaxy S4 box created a binding arbitration contract between Samsung and the consumer. 845
F.3d at 1284. The back of the S4 box stated that the package contained a “Product Safety &
Warranty Brochure.” Id. at 1282. That brochure, titled “Product Safety & Warranty Information,”
was 101 pages long with two sections: (1) health and safety information and (2) Samsung’s
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limited warranty and the user’s software license agreement. Id. Within the warranty section, the
brochure contained an arbitration provision that applied beyond warranty disputes: “All disputes
with Samsung arising in any way from this limited warranty or the sale, condition or performance
of the products shall be resolved exclusively through final and binding arbitration, and not by a
court or jury.” Id. A subsequent paragraph explained the procedures for arbitration and stated
that, without losing the benefits of the warranty, consumers could opt out of arbitration within 30
days of purchase by phone or email. Id.
The Ninth Circuit first laid out the principles of assent under California law. The court
started with the indisputable premise that “[a] contract for sale of goods may be made in any
manner sufficient to show agreement, including conduct by both parties which recognizes the
existence of such a contract.” Id. at 1284 (quoting Cal. Com. Code § 2204(1)). The court
recognized the corollary that silence or inaction usually is not enough because acceptance is
measured by whether an offeree’s outward manifestations of consent would indicate to a
reasonable person that the offeree has assented to the agreement. Id. Finally, the court noted that
“regardless of apparent manifestation of his consent, [an offeree] is not bound by inconspicuous
contractual provisions of which he was unaware, contained in a document whose contractual
nature is not obvious.” Id. at 1285 (quoting Windsor Mills, Inc. v. Collins & Aikman Corp., 101
Cal. Rptr. 347, 351 (Ct. App. 1972)).
Applying those principles, the Ninth Circuit concluded that, “[u]nder the circumstances in
[the] case,” the arbitration provision was unenforceable. Id. at 1290. The court held that the
consumer had not assented to the arbitration agreement expressly nor shown an intent that his
inaction could be understood as acceptance. Id. at 1285. Nor did either of the two recognized
exceptions to the bar on acceptance by silence apply. Id. at 1286. Samsung did not establish that
the consumer, either by operation of law or prior course of dealing, had a duty to act in response to
the brochure. Id. Similarly, Samsung could not claim that the consumer retained the benefit of
the agreement when the consumer was entitled to the benefits of the warranty even if he opted out
of arbitration. Id. Accordingly, the court chose to follow the no-acceptance-by-silence rule. Id.
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The court also addressed Samsung’s arguments that analogies to shrink-wrap agreements
and inside-the-box contracts displaced the no-acceptance-by-silence rule. Id. With a shrink-wrap
agreement, the packaging on the outside of a product states that the consumer agrees to the terms
of the agreement by opening the packaging. Id. The court noted that California law could be read
to support the proposition that a consumer has a duty to act to negate the conclusion that he
accepted the terms by opening the wrapper. Id. at 1287. But that scenario was different than
Samsung’s case. Id. The court reasoned that even if a shrink-wrap agreement “could be
analogized to a brochure that contains contractual terms, the outside of the Galaxy S4 box did not
notify the consumer that opening the box would be considered agreement to the terms set forth in
the brochure.” Id. at 1287. Thus, the court fell back on “California’s general rule that silence or
inaction does not constitute acceptance.” Id.
As to inside-the-box contracts, the court could identify no California case that had adopted
the rationale in the Seventh Circuit’s decision in Hill that buyers can be bound by an arbitration
clause in a brochure enclosed in a product box merely because the buyer kept the product beyond
the specified return window. Id. at 1287–88. In the court’s view, Hill’s holding is difficult to
square with California’s clear rule that silence alone does not constitute assent. Id. at 1290. The
court also explained that even in cases that recognize the propriety of enforcing inside-the-box
provisions in certain instances, the consumer must have adequate notice of the contractual terms.
Id. at 1289. That notice was lacking with regard to the S4. In particular, the arbitration provision
appeared in a brochure titled “Product Safety & Warranty Information,” so a reasonable person
“would not be on notice that the brochure contained a freestanding obligation outside the scope of
the warranty.” Id. at 1289–90. Further undermining the notice was that a reasonable person
would not expect that failing to opt out of an arbitration provision within the seller’s warranty
would subject even non-warranty claims to arbitration. Id. at 1290. Thus, the court “reject[ed]
Samsung’s argument that [the consumer] reasonably assented to the arbitration provision because
he failed to opt out of the arbitration provision contained in the product box.” Id.
In sum, the court determined that “Samsung’s inclusion of a brochure in the Galaxy S4
box, and [the consumer]’s failure to opt out, does not make the arbitration provision enforceable
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against [the consumer].” Id. Armed with that analysis and conclusion, the Court turns to the facts
of the instant case.
b. Application of Norcia to the Facts of this Case
Before scrutinizing the individual circumstances present here, the Court notes a simple, but
important, distinction that applies to all Plaintiffs in the instant case. Unlike in Norcia, Samsung
does not rest its argument for assent entirely on Plaintiffs’ “fail[ure] to opt out of the arbitration
provision contained in the product box.” Id. Rather, because most of the guidebooks premise
acceptance on a consumer’s use of the device, Samsung relies on each Plaintiff’s use of the device.
While that difference may seem practically insignificant, it takes this case outside the silence-by-
acceptance rubric utilized in Norcia. Indeed, in contrast to silence or inaction, each Plaintiff’s use
of his or her phone can signify an outward manifestation of consent. See Restatement (Second) of
Contracts § 19(2) (1981) (noting that a party’s conduct may manifest assent where the party
“intends to engage in the conduct and knows or has reason to know that the other party may infer
from his conduct that he assents”). The court in Norcia recognized that acceptance by conduct is a
valid means of assent under California law. 845 F.3d at 1284–85. And the relevant California
statute, as well as case law interpreting that statute, provides that a contract can be formed where
“conduct by both parties . . . recognizes the existence of such a contract.” Cal. Com. Code
§ 2204(1); Windsor Mills, 101 Cal. Rptr. at 350 (“[A]n offeree, knowing that an offer has been
made to him but not knowing all of its terms, may be held to have accepted, by his conduct,
whatever terms the offer contains.”).
Thus, because each Plaintiff’s use of his or her phone can demonstrate acceptance, the
critical issue here is whether Plaintiffs were on notice of the arbitration clause. As Norcia
recognized, “regardless of apparent manifestation of his consent, [an offeree] is not bound by
inconspicuous contractual provisions of which he was unaware, contained in a document whose
contractual nature is not obvious.” 845 F.3d at 1285 (quoting Windsor Mills, 101 Cal. Rptr. at
351). Courts look to “the mutual intention of the parties at the time the contract is formed.” AIU
Ins. Co. v. Superior Court, 799 P.2d 1253, 1264 (Cal. 1990) (citing Cal. Civ. Code § 1636). This
Court therefore must determine whether a reasonable person in each Plaintiff’s position would
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have known about the arbitration provision and known that using the phone constituted acceptance
of that provision. Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 566 (9th Cir. 2014); see also
Schnabel v. Trilegiant Corp., 697 F.3d 110, 124 (2d Cir. 2012) (interpreting California law and
characterizing the ultimate question as “whether reasonable people in the position of the parties
would have known about the terms and the conduct that would be required to assent to them.”).
Because this inquiry is extremely fact-bound, the Court proceeds by grouping together
Plaintiffs with similar or identical circumstances. First, the Court addresses Plaintiffs with S7s or
S7 Edges. Next, the Court addresses the one Plaintiff with an S6 Edge+ and Plaintiffs with S6s or
S6 Edges. Finally, the Court addresses Plaintiffs with Note5s.
i. S7 and S7 Edge Plaintiffs
Plaintiffs Atebar, Esther Vega, Kouyoumdjian, Dee, and Raymond acquired an S7 or an S7
Edge. FAC ¶¶ 11–12, 20–22. Apart from Plaintiff Dee, who is analyzed separately below, the
remaining Plaintiffs’ S7 and S7 Edge materials follow a natural progression from the outside of
the box to the guidebook’s arbitration provision such that a reasonable person would have been on
notice that using the phone constitutes acceptance of binding arbitration.
(1) Plaintiffs Atebar, Esther Vega, Kouyoumdjian,
and Raymond
The exterior of every S7 and S7 Edge box alerts the consumer that there are additional
terms and conditions. The back of two of the boxes states: “Device purchase subject to additional
Samsung terms and conditions.” Blackard Decl., Exs. C, E. Although these references appear in
the middle of a short paragraph of information, they are written in the same font type and size as
the surrounding text and are not buried in a way that makes them difficult to see. The third box is
even more explicit, instructing buyers to “[s]ee brochures and Terms and Conditions (including
arbitration provision) at T-Mobile.com.” Id., Ex. B. These notices stand in sharp contrast to
what appeared on the box in Norcia. There, the box stated only that the package contained a
“Product Safety & Warranty Brochure.” Norcia, 845 F.3d at 1282. As the court emphasized, a
reasonable person would not understand that there are bilateral contract obligations when the
language is couched in terms of warranties, which run from the seller to the buyer. Id. at 1289–90.
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Here, the text on the boxes uses classic contractual language by giving users notice of additional
terms and conditions. Such language also places this case closer to cases involving shrink-wrap
agreements than Norcia. Thus, the boxes would make a reasonable person aware of the existence
of other binding conditions as part of the purchase.
The guidebooks within the boxes make clear on the cover that the terms and conditions are
contained inside. Although the guidebooks are titled either “Health & Safety and Warranty
Guide” or “Product Safety and Warranty Information,” all of the guidebooks include the following
language in bold on the front: “Please read this manual before operating your device and keep
it for future reference. This document contains important terms and conditions with respect
to your device. By using this device, you accept those terms and conditions.” Blackard Decl.,
Exs. G, H, J. Thus, even for Plaintiffs whose boxes do not indicate where to find the terms and
conditions, their location is prominently displayed on the front of the guidebook in the box. What
is more, the guidebook expressly provides the manner in which the consumer would bind himself
or herself to the terms—“[b]y using th[e] device.” Plainly, this setup is much more likely to notify
consumers than Norcia’s “Product Safety & Warranty Information” brochure, which made no
mention of the buyer’s obligations but instead referred only to the seller’s warranties. 845 F.3d at
1282. Here, Plaintiffs have a much weaker argument that Samsung’s arbitration provision is
“contained in a document whose contractual nature is not obvious.” Id. at 1285 (quoting Windsor
Mills, 101 Cal. Rptr. at 351). The language “[b]y using this device, you accept” prompts
consumers to read the guidebook and indicates that using the device would subject the consumer
to contractual terms.
Once the consumer knows to look within the guidebook to find the terms, there is
sufficient information to direct the consumer to the arbitration provision. Immediately following
the cover, on a page titled “Legal Information,” the consumer is informed that important legal
information is available on the phone or on samsung.com and instructed to “READ THIS
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INFORMATION BEFORE USING YOUR MOBILE DEVICE.” Blackard Decl., Ex. G, at 1;
Ex. H, at 1; Ex. J, at 1.2 Below those statements is the key passage:
Samsung Limited Warranty - This product is covered under the applicable
Samsung Limited Warranty INCLUDING ITS DISPUTE RESOLUTION
PROCEDURE and your right to opt out of arbitration within 30 calendar
days of the first consumer purchase. You may opt out by either sending an
email to [email protected] with the subject line “Arbitration Opt-
Out” or by calling 1-800-SAMSUNG (726-7864). For more detailed
procedures, please refer to the “Dispute Resolution Procedures and Arbitration
and Opt-Out” section of the Limited Warranty.
Id., Ex. G, at 1; Ex. H, at 1; Ex. J, at 1. Although that language is helpful to Samsung, Samsung is
not home free. In particular, the entire passage is framed as a description of Samsung’s warranty
and does not point out that arbitration also applies to non-warranty claims. However, the language
is not actively misleading—it conspicuously mentions arbitration and the 30-day opt out
procedures, and does not state or imply that only warranty claims are covered by arbitration. Even
presuming that consumers are savvy enough to parse the language this closely, the passage would
still give the consumer an indication that certain disputes are subject to arbitration.
From there, it would not take much for the consumer to discover the scope of the
arbitration provision. The language cited above tells the consumer exactly where to look: the
section dealing with dispute resolution and arbitration. That section, aptly labeled “Procedures for
Dispute Resolution/30-day Arbitration and Opt-Out Policy,” appears in the Table of Contents as
the third item in “Section 2: Online Legal Information.” Id., Ex. G, at 8; Ex. H, at 9; Ex. J, at 9.
That the overarching header does not make any reference to Samsung’s warranty further dispels
the possibility that a consumer would understand that arbitration is limited to warranty disputes.
See Norcia, 845 F.3d at 1290 (“Nor would a reasonable person understand that receiving the
seller’s warranty and failing to opt out of an arbitration provision contained within the warranty
constituted assent to a provision requiring arbitration of all claims against the seller, including
claims not involving the warranty.”). Indeed, the consumer’s eye would be drawn to the correct
2 Depending on the time of visitation, the website either closely mirrored the physical guidebook
or was structured in question-and-answer format, where users could find the arbitration provision under the “What is the procedure for resolving disputes?” heading in the “Standard Limited Warranty Information” section. Id., Exs. L, M.
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section both because of its descriptive title—“Procedures for Dispute Resolution/30-day
Arbitration and Opt-Out Policy”—and because the preceding section includes the phrase “Terms
and Conditions.” Id., Ex. G, at 8; Ex. H, at 9; Ex. J, at 9. By contrast, Norcia does not even
mention a table of contents, let alone one that explicitly singles out arbitration and opt out. Thus,
the consumer in Norcia would have had to root through the 101-page page brochure to discover
the arbitration clause, whereas the consumer here is directed to the exact page—either page 19 or
20, depending on the guidebook. Id., Ex. G, at 8; Ex. H, at 9; Ex. J, at 9.
The arbitration clause appears conspicuously at the top of the first page of the “Procedures
for Dispute Resolution/30-day Arbitration and Opt-Out Policy” section. In capitalized font, the
provision reads: “ALL DISPUTES WITH SAMSUNG ARISING IN ANY WAY FROM THIS
LIMITED WARRANTY OR THE SALE, CONDITION OR PERFORMANCE OF THE
PRODUCTS SHALL BE RESOLVED EXCLUSIVELY THROUGH FINAL AND BINDING
ARBITRATION, AND NOT BY A COURT OR JURY.” Id., Ex. G, at 26; Ex. H, at 28; Ex. J, at
27. Finally, a couple pages later, the guidebook repeats and elaborates on the opt-out procedures
identified on the first page:
You may opt out of this dispute resolution procedure by providing notice to
SAMSUNG no later than 30 calendar days from the date of the first
consumer purchaser’s purchase of the Product. To opt out, you must send
notice by e-mail to [email protected], with the subject line:
“Arbitration Opt Out.” . . . Alternatively, you may opt out by calling 1-800-
SAMSUNG (726-7864) no later than 30 calendar days from the date of the
first consumer purchaser’s purchase of the Product . . . .
Id., Ex. G, at 28; Ex. H, at 30; Ex. J, at 29. A consumer’s choice to opt out does not “affect the
coverage of the Limited Warranty in any way,” as the consumer “continue[s] to enjoy the benefits
of the Limited Warranty.” Id., Ex. G, at 28; Ex. H, at 30; Ex. J, at 29. That added ability to avoid
arbitration without penalty, which no Plaintiff took advantage of, further confirms that Plaintiffs
Atebar, Esther Vega, Kouyoumdjian, and Raymond agreed to arbitrate under California law.
The Second Circuit reached the same conclusion under California law on very similar facts
in Meyer v. Uber Technologies, Inc., 868 F.3d 66 (2d Cir. 2017). In that case, the plaintiff
registered for the ride-sharing Uber service on his smartphone. Id. at 70. When he signed up, the
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text “[b]y creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY
POLICY” appeared below the register button and included a hyperlink to the terms of service,
which contained a mandatory arbitration clause. Id. at 71. The Second Circuit concluded that this
setup provided reasonable notice of the arbitration clause. Id. at 78. In particular, the court noted
that “the language ‘[b]y creating an Uber account, you agree’ is a clear prompt directing users to
read the Terms and Conditions and signaling that their acceptance of the benefit of registration
would be subject to contractual terms.” Id. at 79. The court was not bothered by the fact that the
contractual terms were “lengthy and [had to] be reached by a hyperlink”; once the user navigated
to the Terms of Service, the “Dispute Resolution” heading and the sentence waiving the right to
jury were both in bold. Id. The same basic circumstances are present here: the front of the
guidebook’s “[b]y using this device, you accept” language matches the “[b]y creating an Uber
account, you agree” language; the guidebook’s table of contents directed users to the arbitration
procedures; and the arbitration heading, arbitration clause, and opt-out description all appeared in
contrasting type or font to the surrounding text. Plaintiffs are wrong to try to distinguish Meyer on
the ground that it involved pre-transaction disclosures. Opp. 14. Just as the user in Meyer was
exposed to the Terms of Service before creating his account, Plaintiffs here were exposed to the
guidebook before using their phones.
Moreover, the current trend of California cases has been to enforce contracts even when
consumers later receive the terms. Two unpublished, post-Norcia decisions from the California
Court of Appeal are informative. See Emp’rs Ins. of Wausau v. Granite State Ins. Co., 330 F.3d
1214, 1220 n.8 (9th Cir. 2003) (noting that courts “may consider unpublished state decisions, even
though such opinions have no precedential value”).3 In Chau v. Pre-Paid Legal Services, Inc., the
3 Plaintiffs improperly cite a footnote in a dissent, which states that “[unpublished] decisions
cannot inform our analysis of California law because unpublished decisions of the California intermediate appellate courts are not precedential.” Loftis v. Almager, 704 F.3d 645, 657 n.4 (9th Cir. 2012) (Tashima, J., dissenting). However, Plaintiffs do not counter the long line of authority permitting consideration of unpublished state court decisions as indicative of the proper understanding of state law. See, e.g., Daniel v. Ford Motor Co., 806 F.3d 1217, 1223 n.3 (9th Cir. 2015); Roberts v. McAfee, Inc., 660 F.3d 1156, 1169 n.6 (9th Cir. 2011); Emp’rs Ins. of Wausau, 330 F.3d at 1220 n.8; Nunez ex rel. Nunez v. City of San Diego, 114 F.3d 935, 943 n.4 (9th Cir. 1997); McSherry v. Block, 880 F.2d 1049, 1053 n.2 (9th Cir. 1989).
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Court of Appeal held that where the plaintiff signed a contract acknowledging that another
contract with additional terms would be mailed to him within two weeks, the plaintiff was bound
to arbitration based on a “Settlement of Disputes” clause in the second contract. No. B270277,
2017 WL 604721, at *1, *3 (Cal. Ct. App. Feb. 15, 2017). Analogizing to the Seventh Circuit’s
inside-the-box decision in Hill, the court explained that it did not matter that “the terms of the
agreement were provided subsequent to the transaction” because the plaintiff’s use of the
defendant’s services “signal[ed] his implicit acceptance of the terms.” Id. at *3. Relatedly, in
Schuldner v. ITC Financial Licenses, Inc., the Court of Appeal dismissed a breach of contract
claim predicated on the theory that the cardholder agreement was not available at the time of sale.
No. A150522, 2018 WL 416839, at *7 (Cal. Ct. App. Jan. 16, 2018). The court credited the
“string of cases,” including the Seventh Circuit’s inside-the-box opinions in Hill and ProCD,
“recognizing that a cardholder agreement not disclosed at the time of purchase may nevertheless
be enforceable.” Id. These cases further bolster the conclusion that Plaintiffs agreed to arbitration
here. Accordingly, the Court GRANTS Samsung’s motion to compel arbitration as to Plaintiffs
Atebar (as to the S7),4 Esther Vega, Kouyoumdjian, and Raymond.
(2) Plaintiff Dee
This leaves Plaintiff Dee, the final S7 Plaintiff whose facts are somewhat different than the
others. Like with the other Plaintiffs, Plaintiff Dee’s box provides: “Device purchase subject to
additional Samsung terms and conditions.” Blackard Decl., Ex. A. However, whereas the front of
the guidebook informed the other Plaintiffs that the terms and conditions were contained therein,
Plaintiff Dee’s does not. Instead, his guidebook follows a nearly identical presentation to the
brochure at issue in Norcia—namely, the guidebook was titled “Important Information” and had
page numbers for a “Health and Safety Information” section and a “Warranty Legal Information”
section. Compare id., Ex. F, with Norcia, 845 F.3d at 1282; see also Dang v. Samsung Elecs. Co.,
673 F. App’x 779 (9th Cir.) (declining to compel arbitration for a brochure entitled “Important
Information for the Samsung SPH-L710”), cert. denied sub nom. Samsung Telecommunications
4 This S7 limitation is necessary for Plaintiff Atebar because, as described below, he also
purchased a Note5 for which he is not subject to arbitration.
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Am., LLC v. Norcia, 138 S. Ct. 203 (2017). As the court explained in Norcia, the warranty label is
ineffective to put a reasonable person “on notice that the brochure contain[s] a freestanding
obligation outside the scope of the warranty.” 845 F.3d at 1289–90. Although opening the
guidebook would have revealed the language that the consumer accepts the guidebook’s terms by
using the device, a reasonable person had no fair notice that he should read the “Important
Information” guidebook for binding terms and conditions before using the phone.
What fortifies that conclusion is that the exterior of Plaintiff Dee’s box counseled against
looking inside for the terms and conditions. Specifically, Plaintiff Dee’s box provides: “Device
purchase subject to additional Samsung terms and conditions. For more information on your
device, please visit www.samsung.com.” Blackard Decl., Ex. A. Thus, a consumer would likely
consult the Internet to search for Samsung’s terms and conditions. But the website would not put
a reasonable person on notice that he binds himself to arbitration by using his phone. While
consumers are instructed in bold, capitalized letters to read the important legal information before
using the phone, the website nowhere provides that use of the phone constitutes acceptance of the
terms. Id., Ex. M. Moreover, as in the guidebook, the passage noting the consumer’s “right to
opt out of arbitration” is made in the context of Samsung’s warranty. Id., Ex. M at 2, 11–12. In
order to uncover the arbitration provision, the consumer has to scroll almost to the end of the
webpage to the “Procedures for Dispute Resolution/30day Arbitration and OptOut Policy”
subsection. Id., Ex. M at 12. Because that subsection appears within a section called “Standard
Limited Warranty Information,” the consumer can understand that arbitration also applies to non-
warranty claims only by reading the provision. Id., Ex. M at 12. On these facts, the Court
concludes that a reasonable person would not be on notice that assenting to an arbitration
provision within the warranty meant submitting all claims against the seller to arbitration. Norcia,
845 F.3d at 1290.
Another district court in this circuit similarly concluded that no valid arbitration agreement
had been formed in a case involving an S7 with facts virtually identical to Plaintiff Dee’s. See
Velasquez-Reyes v. Samsung Elecs. Am., Inc., No. 16-CV-01953-DMG, 2017 WL 4082419, at *7
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(C.D. Cal. Sept. 13, 2017).5 Looking at the external packaging, the court explained that the
reference to “additional terms and conditions” on the box was insufficient because it did not notify
the consumer where to find those additional terms and conditions or provide that taking certain
actions (such as opening the box or using the phone) constituted assent. Id. at *6. Turning to the
warranty guidebook, the court observed that “the mere inclusion of the Warranty Guide in the
Galaxy S7’s box cannot bind [the consumer] to an arbitration provision appearing toward the end
of the Guide because the Guide’s cover page indicates only that it contains health, safety, and
warranty information.” Id. at 7. Despite the first page’s reference to arbitration, the court held
that “Samsung’s external packaging disclosure and in-the-box Warranty Guide are insufficient to
put a reasonable consumer on notice of the arbitration provision or the contractual nature of the
purchase-and-usage transaction.” Id. For the reasons stated above, this Court agrees and therefore
DENIES Samsung’s motion to compel arbitration as to Plaintiff Dee.
ii. S6 Edge+ Plaintiff
Plaintiff Martin purchased an S6 Edge+. FAC ¶ 10. The critical difference between
Plaintiff Martin and the foregoing Plaintiffs is that Samsung does not submit an exhibit or argue
that the outside of Plaintiff Martin’s box said anything about terms and conditions.
The Court does not read Norcia to mandate that notice appear on the exterior of the box to
form an agreement. In one passage, the court in Norcia rejected Samsung’s analogy to a shrink-
wrap agreement by stating “the outside of the Galaxy S4 box did not notify the consumer that
opening the box would be considered agreement to the terms set forth in the brochure.” 845 F.3d
at 1287. But that statement is not properly understood as a general rule applicable in all scenarios.
Rather, the Ninth Circuit refuted a particular argument raised by Samsung and noted that the
analogy failed because of the absence of language on the box. The Ninth Circuit did not purport
to hold that language on the box is always necessary. As Plaintiffs acknowledge, the court went
5 In contrast, the District Court for the Western District of Washington enforced an arbitration
agreement in connection with a Note7 under similar circumstances. See Schmidt v. Samsung Elecs. Am., Inc., No. 16-CV-01725-JCC, 2017 WL 2289035, at *4 (W.D. Wash. May 25, 2017). Although this Court agrees that Plaintiffs “have more notice of an arbitration agreement here than in . . . Norcia,” the Court respectfully disagrees that “a ‘reasonable person’ was on notice of the arbitration agreement.” Id.
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on to discuss the title and contents of the brochure when it later held that the consumer did not
receive adequate notice of the arbitration provision in the brochure. See id. at 1289. In other
words, Norcia does not preclude consideration of material inside the box.
More fundamentally, Plaintiff Martin’s case is different than Norcia because acceptance
here is tied to the consumer’s use of the phone. Thus, in asking what a reasonable person in
Plaintiff Martin’s shoes would have known at the time the contract was formed, see AIU Ins. Co.,
799 P.2d at 1264, the Court may consider anything that the consumer would have seen before
using the phone—including materials inside the box and (potentially) the contents of the
guidebook. Plaintiffs’ arguments and cited authority support this approach. For example,
Plaintiffs point to Cory v. Golden State Bank, 157 Cal. Rptr. 538, 541 (Ct. App. 1979), and India
Paint & Lacquer Co. v. United Steel Products Corp., 267 P.2d 408, 416 (Cal. Ct. App. 1954), for
the proposition that “California courts have regularly refused to enforce terms that were not
expressed or disclosed at the time of contracting.” Opp. 6–7. Again, Plaintiff Martin’s guidebook
keyed contract formation to his use of the phone. Therefore, the analysis focuses on the materials
that would be seen before the consumer began using the device.
Here, the Court concludes that a reasonable person in Plaintiff Martin’s position would
have been aware of arbitration and that using the phone constituted acceptance. It is true that the
outside of the box provided no notification of arbitration or additional contractual terms. But
when the consumer dumped out the contents of the box to retrieve the phone, he or she would be
confronted with the guidebook. Right on the cover, the guidebook states in bold lettering: “Please
read this manual before operating your device and keep it for future reference. This
document contains important terms and conditions with respect to your device. By using
this device, you accept those terms and conditions.” Blackard Decl., Ex. K at 2. Although that
text is written in smaller font below the title “Health & Safety and Warranty Guide”—which is
similar to the brochure title at issue in Norcia—the inclusion of the additional language would put
the reasonable person on notice that the guidebook contains a freestanding obligation that the
consumer agrees to by using the phone. Unlike Norcia, where the brochure did not appear to be a
contract because the cover did not go beyond mentioning warranties, 845 F.3d at 1289–90, the
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cover here unequivocally alerts the consumer to the presence of terms and the conduct required to
assent to those terms. At a minimum, it is reasonable to conclude that the consumer must take
some affirmative action (such as returning the phone or opting out of arbitration) to negate the
conclusion that he or she accepts the terms. See id. at 1287.
Similarly, in contrast to Norcia, the arbitration clause is not inconspicuous inside the
guidebook. The guidebook contents are the same as the S7 and S7 Edge Plaintiffs’ guidebook, so
the consumer would follow the same course to reach the arbitration clause. In short, the first page
directs the consumer to read the important legal information and notes in bold that arbitration
applies (at least to warranty claims), the table of contents lists a section for dispute resolution and
30-day opt out of arbitration, and the guidebook includes the capitalized arbitration provision and
the bolded procedure describing how to opt out. Blackard Decl., Ex. K at 3, 8, 22–24. The
brochure in Norcia did not reference either legal information or arbitration at the front and had no
table of contents listing arbitration and the option to opt out. As the Court has already concluded
above, the directions at issue here are sufficient to put a reasonable person on notice about the
arbitration provision. Accordingly, the Court GRANTS Samsung’s motion to compel arbitration
as to Plaintiff Martin.
iii. S6 and S6 Edge Plaintiffs
Plaintiffs Anguiano, Hernandez, Pirverdian, Salmasian, and Sanchez purchased either an
S6 or an S6 Edge. FAC ¶¶ 14–15, 18–19, 23. As to these remaining Plaintiffs, the Court need
not do any analytical heavy lifting. Samsung concedes that, under Norcia, these Plaintiffs did not
form an agreement to arbitrate; Samsung “move[s] to compel arbitration with respect to these five
Plaintiffs for preservation purposes only.” Mot. 21. In light of that concession, the Court
DENIES Samsung’s motion to compel arbitration as to Plaintiffs Anguiano, Hernandez,
Pirverdian, Salmasian, and Sanchez.
iv. Note5 Plaintiffs
Plaintiff Atebar purchased a Note5 and Plaintiff Jesus Vega came into possession of a
Note5. FAC ¶¶ 11, 13. The cryptic clues and tortuous path that these Plaintiffs would have to
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follow to arrive at the arbitration clause do not sufficiently place a reasonable person on notice that
using the phone constitutes acceptance of arbitration.
The outside of the box mentions terms and conditions (and even arbitration), but the
presentation is somewhat obscuring and misleading. Specifically, the box states: “See enclosed
materials for manufacturer’s Limited Warranty and important user guide information. See
brochures and Terms and Conditions (including arbitration provision) at T-Mobile.com, for rate
plan information, features and services, coverage maps and additional details.” Blackard Decl.,
Ex. T. That language is sandwiched in the middle of a long paragraph of information and does
nothing to set off this information as important. In contrast, earlier in the paragraph, there is bold
language stating that “[y]our device may not work if you alter its original software.” Id., Ex.
T. Nor does the language give the consumer the full range of details about arbitration; the
consumer must look beyond the box.
The Note5 guidebook fares no better. The guidebook’s title—“Health & Safety and
Warranty Guide”—is unhelpful. Id., Ex. U at 2. Although the cover asks the consumer to read the
guidebook before using the device, no reference is made to contractual promises on behalf of the
consumer. Id., Ex. U at 2. As in Norcia, the contractual nature of the guidebook is unapparent.
845 F.3d at 1285. The inside of the guidebook is to the same effect. Unlike some of the iterations
described above, the first page does not even indicate that use of the phone constitutes acceptance
of the terms contained therein. Blackard Decl., Ex. U at 3. Nor does that page mention
arbitration. It simply provides, in language relating only to Samsung’s warranty, that the phone is
“covered under the applicable Samsung Limited Warranty including its dispute resolution
procedure” and that the terms of the warranty can be accessed on the device or online. Id., Ex. U
at 3. Even the overzealous consumer who decided to read the entire guidebook would come away
with no knowledge that arbitration is on the table because the word “arbitration” does not appear
in the guidebook at all.
Supposing that the Court accepted the dubious proposition that the reasonable consumer
would make it to Samsung’s website, notice still remains lacking. The webpage that Plaintiffs
Atebar and Vega would have viewed has the same uninformative title as the guidebook—“Health
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& Safety and Warranty Guide.” Id., Ex. L at 2. Notice of binding arbitration does not appear
front and center; the first mention of arbitration is in the “What is the procedure for resolving
disputes?” section, nearly at the bottom of the webpage. Id., Ex. L at 12–13. Moreover, the
clause appears in the “Standard Limited Warranty Information” section, id., Ex. L at 11, thereby
hampering the consumer from knowing that arbitration covers both warranty and non-warranty
claims without reading the provision. See Norcia, 845 F.3d at 1290 (“Nor would a reasonable
person understand that receiving the seller’s warranty and failing to opt out of an arbitration
provision contained within the warranty constituted assent to a provision requiring arbitration of
all claims against the seller, including claims not involving the warranty.”). Although the
arbitration provision appears in capital lettering and the opt-out procedures appear in bold, they do
not stand out because multiple other provisions are written in the same formatting. These
circumstances are a far cry from providing notice to a reasonable person that using the phone
constituted assent to arbitration. Accordingly, the Court DENIES Samsung’s motion to compel
arbitration as to Plaintiffs Atebar (as to the Note5) and Jesus Vega.
3. Maryland
Plaintiff Robison is a resident of Maryland who purchased a Samsung Galaxy S6 in
Maryland. FAC ¶ 16. The parties agree that Maryland law governs the question whether he
formed an agreement to arbitrate with Samsung.
Maryland’s law on assent appears to parallel California’s in important ways. Under
Maryland law, “[a]cceptance may be manifested by acts as well as by words.” Cochran v.
Norkunas, 919 A.2d 700, 713 (Md. 2007). Although a party may sometimes manifest acceptance
by silence or inaction, that form of acceptance is considered “the exception and not the general
rule.” Id. A party’s conduct may also signal assent. Porter v. Gen. Boiler Casing Co., 396 A.2d
1090, 1095 (Md. 1979).
Significant here, an offeree may be bound to terms that were unknown to him so long as
the offeree was on notice of the terms. Id.; cf. Mattingly v. Hughes Elecs. Corp., 810 A.2d 498,
508 (Md. Ct. Spec. App. 2002) (“[Cases] inherently recognize as a minimum threshold to
enforcing the arbitration clause that there must be adequate notice alerting the consumer to its
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presence.”), aff’d sub nom. DIRECTV, Inc. v. Mattingly, 829 A.2d 626 (Md. 2003). Plaintiffs’
cited authority is instructive. In Shaffer v. ACS Government Services, Inc., the court, applying
Maryland law, concluded that the plaintiff did not accept the defendant’s arbitration clause when
he signed an acknowledgement that he had read and accepted the terms of an employee handbook.
321 F. Supp. 2d 682, 687 (D. Md. 2004). The court explained that “the acknowledgment form
[the plaintiff] signed clearly did not include a direct acknowledgment and acceptance of an
arbitration policy,” or even mention arbitration at all. Id. Moreover, the provision at issue
occupied seven lines on page 56 of a 71-page handbook and did not explicitly state that employees
were required to submit employment-related matters to arbitration. Id. Thus, the court was
“unwilling to bind [the plaintiff] to arbitration merely because he acknowledged receiving [the]
employee handbook.” Id. Shaffer has been cited and discussed in multiple decisions of the
Maryland Court of Special Appeals. Harby ex rel. Brooks v. Wachovia Bank, N.A., 915 A.2d 462,
468 (Md. Ct. Spec. App. 2007); Holloman v. Circuit City Stores, Inc., 873 A.2d 1261, 1266 (Md.
Ct. Spec. App. 2005), aff’d, 894 A.2d 547 (Md. 2006).
Like the plaintiff in Shaffer, Plaintiff Robison was not on notice of arbitration. The
exterior of his phone box does not mention arbitration and, indeed, says nothing about contractual
promises at all. Blackard Decl., Ex. W. His guidebook also is unilluminating. The front includes
the title “Product Safety & Warranty Information” and the subscript tells the user to “read this
manual before operating your device and keep it for future reference.” Id., Ex. X at 2. It is
not until the fifth page of the guidebook that any relevant information appears and even that
information is unclear. Under the bold “Legal Information” heading, the guidebook states that
“[i]mportant legal information can be accessed in writing on the mobile device or on
samsung.com” and warns users to “[r]ead this information before using your mobile device.”
Id., Ex. X at 7. Directly below that language, the guidebook further states that “[t]his product is
covered under the applicable Samsung Limited Warranty” and that “[f]ull written terms” can be
accessed on the device or at a specific link. Id., Ex. X at 7. Nowhere on the page is there any
indication that the consumer is agreeing to particular terms or submitting to arbitration; in fact, the
word “arbitration” does not appear anywhere in the guidebook.
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Even if these frustratingly oblique references were sufficient to lead the consumer to
Samsung’s website, the Internet page still does not conspicuously provide the arbitration provision
or otherwise inform the user that an arbitration clause exists. The page is titled “Warranty
Information” and the first section is called “Standard Limited Warranty.” Id., Ex. Y at 2. The
webpage is structured in a question-and-answer format, including questions such as “What is
covered and for how long?” and “What must you do to obtain warranty service?” Id., Ex. Y
at 2–3. If the consumer somehow intuits that he should scroll down the page to the “What is the
procedure for resolving disputes?” section, then he is greeted with the familiar arbitration
provision in capital letters. Id., Ex. Y at 4. Unless the consumer reaches this point, he has no way
of knowing that the arbitration provision applies to warranty and non-warranty claims alike and
that Samsung provides an opportunity for the consumer to opt out. Id., Ex. Y at 4–5. This
labyrinthine series of instructions cannot fairly be said to have put Plaintiff Robison on notice that
he would be bound by arbitration if he failed to opt out within 30 days, especially when, unlike the
plaintiff in Shaffer, he did not even provide an acknowledgement of the document containing the
arbitration provision or the documents purportedly leading him to the arbitration provision.
Samsung’s arguments to the contrary are unpersuasive. Samsung argues that the
arbitration clause was incorporated into the guidebook by reference. Mot. 21. Even if the
incorporation by reference doctrine could be invoked here, the Court has already concluded that
neither the guidebook nor the website gives adequate notice of the arbitration provision. Next,
Samsung analogizes to cases where Maryland courts enforced arbitration agreements based on a
consumer’s use of a credit card. Id. at 20; Reply 13–14. However, in those cases, the plaintiffs
acknowledged or received agreements from their credit card companies that alerted the plaintiff to
arbitration and described the actions that would bind the plaintiff. See Bey v. Midland Credit
Mgmt., Inc., No. 15-CV-01329-GJH, 2016 WL 1226648, at *4 (D. Md. Mar. 23, 2016) (“[T]he
Card Agreement that governed [the plaintiff’s] use of his credit card and the terms and conditions
that governed [his] use of the T-Mobile cellular services both provided that those agreements
would bind each Plaintiff upon their use of the respective services . . . .”); Whitman v. Capital One
Bank (USA), N.A., No. 09-CV-01737-WMN, 2009 WL 4018523, at *2 (D. Md. Nov. 19, 2009)
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(noting that the plaintiff used his credit card after signing an application indicating that he had read
and agreed to the Terms of Offer, which included an arbitration provision). The maze of
instructions in Plaintiff Robison’s guidebook provides nowhere near the same level of clarity.
Accordingly, the Court DENIES Samsung’s motion to compel arbitration as to Plaintiff Robison.
B. Motion to Dismiss Class Claims
For Plaintiffs whose phones are subject to arbitration, Samsung also moves to dismiss their
class-action claims. Mot. 23–24. The relevant Plaintiffs’ guidebooks included a clause waiving
class treatment immediately below the arbitration clause. Specifically, that clause provided that
“ANY SUCH DISPUTE SHALL NOT BE COMBINED OR CONSOLIDATED WITH A
DISPUTE INVOLVING ANY OTHER PERSON’S OR ENTITY’S PRODUCT OR CLAIM,
AND SPECIFICALLY, WITHOUT LIMITATION OF THE FOREGOING, SHALL NOT
UNDER ANY CIRCUMSTANCES PROCEED AS PART OF A CLASS ACTION.” Blackard
Decl., Ex. G at 26; Ex. H, at 28; Ex. I at 30; Ex. J, at 27; Ex. K at 22. The Supreme Court has
enforced class waivers in arbitration agreements in functionally identical circumstances. Am. Exp.
Co. v. Italian Colors Rest., 570 U.S. 228, 233–39 (2013). Plaintiffs do not contest that the
Plaintiffs whose phones are subject to arbitration cannot sustain their class-action claims.
Accordingly, the Court GRANTS Samsung’s motion to dismiss the class-action claims of
Plaintiffs Martin, Atebar (as to the S7), Esther Vega, Holzworth, Kouyoumdjian, and Raymond.
C. Motion to Stay the Litigation Pending Arbitration
Finally, Samsung requests that if the Court orders arbitration as to any Plaintiff, it should
stay all proceedings in this litigation pending arbitration. Mot. 24–25. Under the FAA, the court
is authorized to stay proceedings pending arbitration. 9 U.S.C. § 3 (“[U]pon being satisfied that
the issue involved in [the] suit or proceeding is referable to arbitration under [the pertinent]
agreement, [the court] shall on application of one of the parties stay the trial of the action until
such arbitration has been had in accordance with the terms of the agreement . . . .”). This Court
and other courts have stayed all claims in an action even if only some of the claims will be
arbitrated. See Marchand v. Northrop Grumman Corp., No. 16-CV-06825-BLF, 2017 WL
2633132, at *13 (N.D. Cal. June 19, 2017); Trinchitella v. Am. Realty Partners, LLC, No. 15-CV-
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02365-KJM, 2016 WL 4041319, at *13 (E.D. Cal. July 27, 2016); Mohebbi v. Khazen, No. 13-
CV-03044-BLF, 2014 WL 6845477, at *12 (N.D. Cal. Dec. 4, 2014); Gunawan v. Randstad Gen.
Partner (US) LLC, No. 13-CV-01464-CJC, 2013 WL 12142565, at *3 (C.D. Cal. Dec. 16, 2013).
A stay of all claims is particularly warranted in the class-action context because the complaint
admits that common questions of fact and law predominate. See Morales v. Lexxiom, Inc., No. 09-
CV-06549-SVW, 2010 WL 11507515, at *11 (C.D. Cal. Jan. 29, 2010); Bischoff v. DirecTV, Inc.,
180 F. Supp. 2d 1097, 1114 (C.D. Cal. 2002). In the instant case, Plaintiffs do not dispute that the
Court should stay all proceedings if it orders arbitration as to any Plaintiff. Accordingly, the Court
STAYS this action pending the completion of arbitration.
IV. ORDER
For the foregoing reasons, IT IS HEREBY ORDERED that Samsung’s motion to compel
arbitration and to dismiss class-action claims is GRANTED as to Plaintiffs Martin, Atebar (as to
the S7), Esther Vega, Holzworth, Kouyoumdjian, and Raymond. Samsung’s motion to compel
arbitration and to dismiss class-action claims is DENIED as to Plaintiffs Atebar (as to the Note5),
Jesus Vega, Anguiano, Hernandez, Robison, Pirverdian, Salmasian, Dee, and Sanchez.
Samsung’s motion to stay all proceedings pending the outcome of arbitration is GRANTED.
Within seven days of the resolution of the arbitration, the parties shall file a joint status report
advising the Court of the resolution of the matter and any further action required by the Court.
Dated: March 30, 2018
______________________________________
BETH LABSON FREEMAN United States District Judge
Case 5:16-cv-06391-BLF Document 87 Filed 03/30/18 Page 25 of 25
